U1 AOS2 - Lesson 4 - NPF Influencing Demand (Shift) Flashcards
VCAA 2024
Question 3
Which of the following events would be most likely to shift the demand curve for a good or service to the right?
A. a decrease in the price of a good or service
B. a decrease in the levels of direct taxation
C. a decrease in the price of a substitute good or service
D. a decrease in the costs of production
B
Direct taxation refers to taxes on individuals’ incomes. A decrease in the levels of direct taxation → increase disposable income → increased willingness and ability to consume → increase deamnd (shift to right)
Only 55% of the state got this right!
What is a shift in the demand curve?
A shift in the demand curve refers to a change in the quantity demanded at every price level due to factors other than the price of the good itself.
True or False: A shift to the right of the demand curve indicates an increase in demand.
True
Fill in the blank: A decrease in consumer income typically leads to a _____ shift in the demand curve for normal goods.
leftward
Which of the following factors can cause a shift in the demand curve?
A) Change in consumer tastes
B) Change in the price of the good
C) Change in the number of suppliers
A) Change in consumer tastes
VCAA 2017
Question 4
What would be the effect on the market for Good X if there were a rise in the price of a substitute good?
A. The demand curve would shift left and the equilibrium price of Good X would decrease.
B. The supply curve would shift left and the equilibrium price of Good X would increase.
C. The demand curve would shift right and the equilibrium price of Good X would increase.
D. The supply curve would shift right and the equilibrium price of Good X would decrease.
C
Qantas’ loyalty program has reached 17 million members, which is up 11% from 2024-25.
Outline how this impacts demand for flights.
Higher loyalty program membership → consumers are more willing to fly in order to gain more points/rewards = increase in preference to fly → increase demand at any given price
A successful advertising campaingn for a new technology called ‘Smellevision’ would be expected to cause:
A. the demand curve to shift right, resulting in a higher equilibrium price and quantity
B. the demand curve to shift right, resulting in a lower equilibrium price and quantity
C. the supply curve to shift left, resulting in a lower equilibrium price and quantity
D. the supply curve to shift left, resulting in a higher equilibrium price and quantity
A
The construction of new houses around Winter Valley is likely to have what impact on the market for furniture?
Increased population → increased ability to consume furniture → increased demand
The Federal Government decides to increase personal tax rates.
What would be the impact on the market for whitegoods (eg. fridges, freezers and washing machines)
Increased income tax → decreased disposable income → decreased willingness and ability to consume discretionary goods such as whitegoods → decrease demand for whitegoods
Point of Difference between movement along demand curve and shift of demand curve
- Point of Difference = whether it is caused by a price or non-price factor
- Movement along demand curve includes contractions/expansions. Caused by changes to price, which in turn are caused by non-price supply factors
- Shift of demand curve caused by non-price demand factors (such as changes to disposable income)
The demand curve for a good is most likely to shift right with a
A. rise in the price of both substitutes and complements
B. fall in the price of both substitutes and complements
C. rise in the price of substitutes and a fall in the price of complements
D. fall in the price of substitutes and a rise in the price of complements.
C
Which of the following factors can shift the demand curve?
A) Consumer income
B) Price of related goods
C) Consumer preferences
D) All of the above
D) All of the above
Demand Non Price Factors
- Changes in disposable income
- Prices of substitutes and complements
- Tastes and preferences
- Interest rates
- Population and demographics
- Consumer confidence
True or False:
An increase in consumer income typically leads to an increase in demand for normal goods.
True
How does population demographics affect demand?
Population demographics affect demand by influencing the number and characteristics of potential buyers, such as age, gender, and income distribution.
Which of the following is NOT a factor that causes a decrease in demand?
A) Increase in consumer income
B) Change in consumer tastes
C) Increase in the price of substitutes
A) Increase in consumer income
BHP is a major supplier of copper in Australia and has noted that demand for copper has recently increased rapidly. Copper is a key ingredient for making electric vehicles and renewable energy infrastructure.
This increase in demand is an example of
A. Increase in price of substitutes
B. Increase in price of complement
C. Change in taste and preferences
D. Decrease price of substitutes
C
Taste and preferences for more sustainable energy sources → increased demand for copper
Can’t be an increase in price of complement as price of EVs/renewables has fallen and this would be associated with decreased demand for copper
A major determinant of demand in a particular market could be the:
A. disposable income of buyers in the market
B. real labour cost
C. method of production
D. cost of raw materials
A
A shift of the demand curve to the left represents
A decrease in the quantity demanded at any given price
A shift of the demand curve to the right represents
An increase in the quantity demanded at any given price
What is the impact of a shift of the demand curve to the left?
- Shift of the curve to the left = decrease quantity demanded at any given price
- Without a change in the price from E1, a temporary surplus will form
- Market forces will place downward pressure on price to reach a market clearing price
- Therefore, will result in a decrease in quantity and price
What is the impact of a shift of the demand curve to the right?
- Shift of the curve to the right = increase quantity demanded at any given price
- Without a change in the price from E1, a temporary shortage will form
- Market forces will place upward pressure on price, with consumers who want the good/service more being willing to pay a higher price
- Therefore, will result in a increase in quantity and price
Increase price of complement →
Decrease demand for original good/service
Decrease price of complement →
Increase demand for original good/service
Increase price of substitute →
Increase demand for original good/service
Decrease price of substitute →
Decrease demand for original good/service
What types of taxes cause a shift of the demand curve?
Direct taxes - eg. income taxes
List all the factors which could cause this situation in the market
- Decrease in disposable income,
- Decrease in the prices of substitutes
- Increase in the price of complements
- Unfavourable tastes and preferences
- Increase in interest rates
- Decrease in population and demographics
- Decrease in consumer confidence
List all the factors which could cause this situation in the market
- Increase in disposable income,
- Increase in the prices of substitutes
- Decrease in the price of complements
- Favourable tastes and preferences
- Decrease in interest rates
- Increase in population and demographics
- Increase in consumer confidence
